Macroeconomic and Developmental Indicators
Guinea Economic Outlook
Guinea is a fragile country with heightened risks of social and political instability. In terms of human development, the country is classified in the low human development category of UNDP’s Human Development Index (HDI)—ranking 175 out of 188 countries in the world in 2018. Poverty levels are very high, affecting about 55% of the population in 2012. The variation in poverty levels remains far higher in rural areas (65%) than in urban centers (35%).
Real GDP growth is estimated to have increased slightly to 5.9% in 2019, up from 5.8% in 2018. It has averaged more than 6.7% over the past years, thanks to a booming mining industry. Guinea boasts of more than 25% of the world’s bauxite reserves and has a considerable amount of reserves in iron ore, diamond, and gold. Real GDP is expected to reach 6.0% 2020, driven by increased production of bauxite and gold, higher agricultural production and continued buoyancy in construction activity. Risks to the outlook include heightened political and social instability due to the upcoming legislative and presidential elections in 2020. Inflation still remains still single digit, hovering around an average of 8.9% over the past 6 years.
The fiscal deficit widened from 1.1% of GDP in 2018 to an estimated 2.6% of GDP in 2019. Public debt also increased to 45.4% in 2019 from 38.2% in 2018, but the overall risk of public debt distress is also assessed to be moderate according to the IMF. The current account deficit widened sharply to 18.4% of GDP in 2018 from 7.1% of GDP in 2017 and it is expected to reach 20.7% of GDP in 2020. The worsening of the current account was on the back of the rising of imports which partially offset the strong export growth in the mining sector.
The financial sector remained broadly sound but elements of vulnerabilities persist. Credit to the private sector increased, supported but the bank’s improved liquidity conditions as monetary policy eased. Non-Performing Loans declined to 8.7% at end-June 2018, which is relatively lower than the region’s average of 15%.
The business environment is gradually improving as the country is ranked 152 out of 180 countries in the World Bank Ease of Doing Business survey, an improvement from 153 and 163 places in 2017 and 2016, respectively. According to the 2019 World Bank Enterprise Survey, which monitors the biggest obstacle of doing business for small-enterprises, political instability (38.5%), rigid customs procedures and trade regulations (10.4%) and high tax rates (9.7%), and infrastructure (6.9%) were among the medium biggest obstacle to doing business in Guinea.
Guinea met three out of four of its primary convergence criteria, and only one out of two of its secondary criteria in 2019.